Talent Pulse: There’s greater tension than before in compensation decisions

If you’re not already in the middle of budgeting season, you will be soon. And your time there will include weighing how much more to pay your teams. But, say the economists and researchers at The Conference Board, many C-suites are likely to lean on “disciplined, targeted investment” for 2027 over broad compensation hikes.

The main takeaways from a recent Conference Board survey and report are relatively clean: Companies are planning for a 3.5% median increase to their salary budgets next year, which is the same as 2026’s plans called for. And, reflecting several other bits of labor-market research, broad layoffs don’t seem to be in the cards. So far, so good.

But underneath those headlines sit quite a bit of tension and turmoil, Conference Board researchers say. A third of employers say a tight labor market is making things tough and influencing pay decisions but more than half say economic uncertainty is weighing on strategy.

Sitting between those two factors—both in the Conference Board’s report and in real life—sits the desire/need to automate more operations, be it via AI or other technologies. If finding talent is difficult, investing more in tech is a logical path to follow. But if leadership teams aren’t so sure about the health of their markets, committing capital comes with a higher hurdle.

“That uncertainty creates some tension,” Diana Scott, U.S. human capital leader at The Conference Board, said on a webcast earlier this month. “You can’t disconnect […] pay decisions from these kinds of issues.”

To download the Conference Board report and check out the on-demand webcast, click here.

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